Bitcoin in the Headlines: Queen of the Blockchain

Bitcoin in the Headlines is a weekly analysis of bitcoin media coverage and its impact.

If there was remaining doubt that digital currency applications of bitcoin have taken a backseat to distributed ledger use cases, the October edition of Bloomberg Markets illustrated how fast this narrative is gaining traction.

“It’s all about the blockchain,” read the cover of the monthly magazine, currently on sale, the slogan referring to bitcoin’s underlying distributed ledger and the growing contingent of financial executives who believe the technology will dramatically reshape how they do business.

Personifying this transition was the magazine’s cover star, 46-year-old Blythe Masters, the CEO of blockchain startup Digital Asset Holdings (DA) and a 27-year JP Morgan veteran best known as one of the early proponents of the credit-default swap.

The interview, Masters’ first lengthy sit down as DA CEO, further shed new light on how big banks are seeking to leverage the technology, a narrative that also surfaced in the week’s other dominant stories.

Master of the blockchain

Inarguably the most high-profile veteran of Wall Street to go full time on a blockchain project, Masters is rumored to be raising venture funding on a valuation of as much as $1bn, a goal that could be expedited given her propensity to attract media attention.

While much about DA still remains under wraps, the sweeping 3,000-word article provided evidence of the attention Masters’ star power has so far brought to the industry.

Overall, the article largely provided background on the larger narrative of Wall Street’s interest in bitcoin, diverging to spend time on Masters’ professional history and bitcoin’s origin. Surprisingly few new details were provided about Masters’ career and new company.

DA did reveal it intends to focus on three markets, US treasury repos, syndicated loans and equity shares in private companies, though this is notably terrain that is already being sought after by firms including Overstock’s tØ.com and Symbiont.

Rather than delve into the mechanics of DA and its market strategy, however, authors Edward Robinson and Matthew Leising spent more time on building up the narrative around the technology, writing:

“In a matter of months, this word, blockchain, has gone viral on trading floors and in the executive suites of banks and brokerages on both sides of the Atlantic. You can’t attend a finance conference these days without hearing it mentioned on a panel or at a reception or even in the loo.”

The piece’s most important finding shed light on the fact that, while banks have been touting an interest in private blockchains, Masters herself believes there will be value in connecting these databases to open public ledgers such as bitcoin.

Robinson and Leising suggested DA is in fact working on both private decentralized ledger projects, as well as offerings that would “connect its customers to the existing bitcoin system”.

Elsewhere, Bloomberg commentator Matt Levine penned an editorial calling foul on what he suggested is the trumped up controversy around distributed database systems, asking:

“But do you care about exactly how the computers determine and record the market participants’ agreement on who sold what to whom?”

Still, Masters showed she could make news simply by holding an interview, as her comments were widely covered by outlets including MarketWatch and American Banker.

Big banks reveal more

On the subject of big banks, both UBS and Barclays made the news this week for releasing new information about their ongoing experimentations with digital currency and blockchain tech.

Of the two, Barclays was the biggest winner for its announcement that it would work with an unnamed bitcoin firm, later revealed by The Wall Street Journal to be wallet provider Safello, to help charities accept bitcoin as part of a program to be announced later this year.

Confusion arose, however, when Ars Technica published an article that perhaps took too much creative license with the original details revealed by The Sunday Times in its reporting.

Ars Technica suggested that Barclays would go so far as to accept bitcoin into its bank accounts, though it later corrected the overstatement. The development would have been surprising given that many major banks are still uncertain about their ability to work with the technology in anything other than an experimental environment.

Still, the notion that Barclays had somehow become the “first” bank to accept or support bitcoin proliferated in headlines, even despite the ample work being done by other major financial institutions to understand the technology.

As such, Barclays received perhaps exaggerated headlines in outlets including Quartz and The Daily Mail, among others, that perhaps strengthened this misconception.

The news reverberated around the world as well with news of Barclays’ favorable stance on the technology even reaching Russian-language news outlets.

BitPay’s free publicity

One of the more odd news pieces this week came from tech blog TechCrunch, which chose to highlight the technology host Alex Wilhelm called “that thing that you’ve heard of and that you claim to understand but you do not”.

While meant to be tongue-in-cheek, the line was perhaps more reflective of the video and its approach to highlighting industry conversation than intended.

Though it covered some pertinent current issues (such as the ongoing debate around how the network should address the scalability of its core software), the six-minute talk was largely focused on adoption of bitcoin as a consumer payment method and the effect of media interest on price, two trends that have been fading in relevance in industry conversation.

Much of the narrative was driven by featured guest Sonny Singh, CCO of the merchant bitcoin payments startup BitPay, a firm that has raised $32.5m in public funding, but has recently shown signs its business is suffering growing pains, cutting short a large public contract and laying off staff members.

Singh also positioned himself and his company against the prevailing news narratives, noting that in his position he “never talks about the word blockchain”.

“A payment manager of a big company would have no idea of what that means,” he said.

This may be unsurprising given that merchants are still primarily interested in the technology for its use as a low-cost digital cash, though it’s notable that Singh suggested his firm was seeing continued interest from merchants.

“You went from redheaded step child to belle of the ball,” Wilhelm quipped in response to Singh’s statements that merchants were now “calling BitPay” to accept bitcoin.

The statements, though potentially accurate, run counter to evidence collected by CoinDesk in its recent Q2 State of Bitcoin report, which found that growth in overall merchant adoption is now slowing.

Also unmentioned were continued reports that the company has been mired by high-profile developer exits and an inability to monetize given that it offers its merchant processing services at no cost.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.